Best way to share cost of holiday home with family?

SavingPennies_2

I don't know why you are overcomplicating it so much (one person pay tv licence, another council tax etc). Why not just buy the property yourself (you seem to suggest you have the means to do so) and if family members want to stay they can give you a gesture payment: they get a cheap holiday, you get some money towards the costs and upkeep = everybody's happy.

What you are suggesting has a potential to get messy imo, plus what about when you rent to strangers are you family (who are contributing) going to expect to get a proportion of the income/profit from letting it out to other people? What if a family member decides in 6 months they no longer want to use it and want to stop paying their share, will you be able to cover it? Honestly, it raises so many potential issues what you suggesting!

No idea about tax etc,

Titus_Wadd

Definitely keep it simple - I don't have any tax info but informal family arrangements are a recipe for major upsets. 

Decide how much a couple of days, or a week should "cost" and charge everyone the same daily, weekly or monthly rate for exclusive use.  There will be some who are able to use it more than others (retirees more than those in full time work or education)  and those who skip a year without staying may resent their annual payment/contribution.  The only fair way is to charge for occupancy.  Shared ownership with different relatives at different rates of use sounds like a major headache.  Payment up front for a weekend or weekly rate seems workable.  If someone stayed but didn't pay up would you take them through the small claims court or not let them stay again until they paid?

Families fall out over far less in my experience.

IdéeFixe

No plans to rent it to strangers. If I did, then I would start covering all the costs myself. Also if someone wants to stop using it, and stop contributing, that’s fine. Gesture payments could be a reasonable approach, but then I suppose it’s like undeclared rental income?

I think I’ll just ask my parents to gift me something towards the deposit, probably the simplest thing. And if I need to stretch for a bigger deposit, maybe take up a no-interest loan from a relative I’m close with, and repay it over 6 months or something.

ouraggie

I would add up all the annual running costs ie council tax, Internet, gas and electric, water etc. Divide this by 52 to get a weekly rental cost. You could add a small amount to cover "wear and tear/updating". Be aware that some parties will use £20 in fuel in a week if they eat out anddont put the heating on . Others will recreate the tropical atmosphere they have at home, so they can walk round in vest tops and bare feet in Dec all week. A smart meter or meter readings takes care of that one. In our holiday cottage I give a weekly included allowance of £25 and charge for anything above this. Don't have to charge that often but when I do its usually a big sum. In addition to the central heating we have an electric fire which costs 60p an hour to run. Some will happily run this for 5-6 hours every evening alongside the heating on max setting. 
Re the mortgage, either you pay this yourself or use the same process. Add the weekly cost to the rental cost. Once mortgage is paid, rental will be cheaper. 
I would also take a damage deposit with every single booking, or initially they pay £100-200, which is kept by you as the ongoing damage deposit. Family, in my experience, break or damage things, but don't think they should pay as they are family ("it was an accident. Surely you aren't gonna bill your own brother...").

greensalad

My grandparents own a holiday home for all of us to use. We each pay a set amount per week we use the property, which is roughly equal to a week's worth of the electricity/water/ground rent that my Grandparents pay. Works out about £100 and it sleeps 4-6 so when we go with friends we split that cost. Obviously my friends are more than happy to pay £25 for a week's stay in a holiday home!

If a group not part of the family want to use it (e.g no one from the family is holidaying but we've suggested it to other friends of ours - we don't rent to the public), they pay that plus about 50% which helps cover cleaning (we clean it ourselves when we go) and I guess just a little bit of "danger money" considering they are not the family and are more likely to damage something.

We have discussed what to do regarding renovations (the property has been in family ownership for about 15 years now and needed some furniture upgrades). Unfortunately we couldn't really decide what to do so my grandparents ended up purchasing. However, every time we go we will try and do something nice for the house. I bought a new fancy BBQ when the old one got ropey. My aunt and uncle bought some nicer lounge chairs when the others broke. We leave inflatable toys there, books and CDs. Mum took a bluetooth speaker and left it there. We all just try and do our best to make the property enjoyable not only for ourselves but everyone who visits!

robatwork

You side-stepped the question of ownership so we'll presume you will own it outright and everyone else just uses as a holiday home with no long-term benefit.

As you can afford it, the way I'd organise it is to either ask people to pay a weekly amount to cover the bills when they use it (like the £100 above), or just ask them to contribute any amount they see fit and can afford. 

letsbetfair

That reminds me - it's also worth thinking about cleaning. In lots of families, ideas about what counts as a good standard of cleaning vary considerably!

steampowered

IdéeFixe said:

From my perspective, rather than have money pile up in the bank

There is a whole world of investments out there which are not residential property! You should at least consider a conventional investment. Buying a stock market tracker fund or topping up your pension are the main alternatives. The stock markets / pensions return on average 6-7.5% per year. 

If you have decided that you are happy to forego a typical investment return and keep a second property instead, then by all means go ahead. You will of course have higher rate stamp duty to pay on the purchase and potentially capital gains tax when you sell.

Waunakee

We did something similar about 15 years ago in The Lakes.We purchased outright and paid service charges/sinking fund but other utilities were shared pro rata.

Initially great and someone from the immediate family visited most weekends.But as time ticked along folks tired of visiting the same place all the time and usage dropped off within a few years to the point where the apartment sat empty for much of the time.

We turned to using it as a holiday let but sold pre COVID as it made us no money and relying on a letting agent was not without its difficulties.

Was great whilst it lasted and we made a reasonable return on selling but it isn’t something I would consider again as in the end I resented endlessly visiting the same place over and over!

IdéeFixe

steampowered said:

There is a whole world of investments out there which are not residential property! You should at least consider a conventional investment. 

Fair point. However, of my total income, about a quarter is lost to tax (inc council), a quarter goes to pension, and with this 2nd home my essential bills (inc mortgage) would swell to one quarter, leaving still one quarter left for general spending (~5-10%) and saving (eg. ISAs). Holiday home a lot more fun than a tracker fund! I suppose as Waunakee says, the novelty might wear off, but I think I would regret not spending the money on something that would bring immediate benefit.